Judge Gilstrap rules that damages can be enhanced if SEPs subject to a FRAND commitment are willfully infringed (Core Wirless v. LG)

Judge Gilstrap recently denied accused infringer LG’s motion for summary judgment that alleged standard essential patents (“SEPs”) were not willfully infringed, letting that issue go to the jury; if the jury finds willful infringement, then the court may decide whether and to what extent to enhance damages based on such willful infringement. An important procedural point is that Judge Gilstrap did not rule that there was willful infringement in this case; rather, under the permissive summary judgment standard, he ruled that there was sufficient evidence to let the jury decide the issue. He did rule as a matter of law, however, that there is no special rule for SEPs that precludes finding willful infringement or enhancing damages, and he left the door open to consider policy arguments about SEPs subject to FRAND commitments when exercising discretion whether to enhance damages.

Background

Patent owner Core Wireless sued LG in 2014 for infringing patents alleged to be essential to mobile communication standards such as GSM, GPRS, UMTS and LTE. LG denied that the patents were infringed or essential to those standards. Prior to suit, Core had at least one in-person meeting with LG concerning the patents. Core also had provided LG claim charts (it is not clear whether that was before or after the lawsuit was filed). Core also asserted that, in a deposition, an LG representative admitted that the accused LG phones contain the standard-compliant features alleged to infringe the patents.

LG brought a summary judgment motion on the issue of willful infringement arguing, among other things, that “enhanced damages based on willfulness are in effect punitive and thus inappropriate in the context of standard-essential patents where infringement is an expected part of the standard setting model.”

Decision

Judge Gilstrap ruled that there were substantial issues of material fact whether the alleged infringement was willful, because a reasonable jury could decide that the accused infringer acted willfully. He also ruled that whether the patents were indeed standard essential patents does not change that determination. As a threshold issue, because the accused infringer disputed whether the patents are essential to the standard, the argument premised on no willful infringement for SEPs relies on a disputed factual issue. Further, even if the patents are SEPs, Judge Gilstrap ruled that there was no reason SEPs cannot be willfully infringed and damages enhanced based thereon.

Judge Gilstrap divided the issue into (1) a jury determining whether the SEP is willfully infringed and (2) whether and to what extent the court would enhance damages based on such willful infringement. On the first point, the accused infringer cited no authority that a jury could not determine whether an SEP was willfully infringed. Rather, the accused infringer focused on the second point, arguing that enhanced damages were not appropriate for SEPs where the patent owner committed to license the SEPs on FRAND terms. The accused infringer also argued that “enhanced damages amount to punitive damages and that the primary rationales for awarding punitive damages (such as to deter concealed infringement) do not exist in the standard-essential patent context.”

Judge Gilstrap found the enhancement argument premature regarding the instant issue of whether a jury may determine willful infringement in the first instance, because a jury can make the willfulness determination and only then would arguments about no enhancement be considered when the court exercises its discretion of whether and to what extent to enhance damages. He also ruled that willful infringement issues may exists in the SEP context, stating:

Moreover, it is not evident that concerns about concealed infringement are always absent in standard-essential patent cases. For example, Core contends that LG initially denied that its accused products practice the UL DTX and UL DRX features of 3GPP, but that LG’s corporate representative later admitted LG’s products do implement these features. A factfinder could credit this evidence and conclude that LG willfully or wrongfully took steps to conceal infringement.”

Judge Gilstrap further found that the Supreme Court’s Halo decision (see our June 13, 2016 post) on preserving discretion to enhance damages counsels against a bright line rule as to SEPs, stating:

Finally, in light of the strong emphasis that Halo placed on preserving a court’s discretion to enhance damages, it would be inappropriate to create a bright line rule forbidding enhanced damages merely because the asserted patents are standard-essential.

Accordingly, Judge Gilstrap ruled that genuine issues of material fact requires putting the issue of willful infringement before the jury to determine.

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David W. Long founded Essential Patent LLC (http://essentialpatent.net) to focus on patent law and related hi-tech intellectual property issues, including standard essential patents, licensing negotiations, mediation and other legal services. David has over twenty-five years of telecommunications experience, including over twenty years litigating complex patent cases in federal district and appellate courts. Read More

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The Essential Patent LLC intellectual property law firm welcomes you to the Essential Patent Blog! This blog was started in response to increased interest and litigation surrounding standard-essential patents (SEPs). Historically, most SEP issues were relegated to theoretical discussions in academic literature or conference presentations. But that’s changing.